The launch of Egypt's reform program was a reversal from past policies, which
had led to a buildup of large external and fiscal imbalances. With the liberalization
of the foreign exchange (FX) market, the parallel market was eliminated and FX
shortages virtually disappeared. The ongoing fuel subsidy reform, wage restraint, and
significant revenue gains from the new value-added tax (VAT) underpin fiscal
consolidation, which is critical for debt sustainability. Structural reforms to revive growth
and employment are progressing well. The reform program received strong approval
from the business community, international development partners and foreign
investors.